Remodeling a room at home, whether kitchen, bathroom or bedroom, is a big task, requires a lot of coordination and planning. The first and often the most daunting task is to discover how you are going to finance your project.
The good news is that there are a number of options to consider. Here are some tips to find the right solution that fits your personal financial situation:
Advantage of payment with cash
Cash is a great option if you can save enough money. By paying in advance for your remodeling work, you will not have additional financing costs. You will simply have to pay for the items as you need them from your own financial reserve.
Disadvantage of paying with cash
Even if you can get the money to pay for your project, you must make sure you do not spend all of your savings. It is a good idea to always have 3 to 6 months of expenses covered. In case the improvements mean emptying your savings account, consider other options.
Loan with mortgage guarantee
Advantage of a loan with mortgage guarantee
These types of loans usually have long terms, this means that the loans are larger for large projects too. This, in a certain way, ensures time to return what has been received; In addition, they give the possibility of deducting the total payment of their taxes at the end of the year.
Disadvantage of a mortgage loan
Acquiring a home equity loan is not an easy task. First, you must allow your home to be used as collateral for the loan. Then, you may have to wait six to eight weeks before receiving an answer about whether you qualify. You may also be responsible for some other charges involved, including opening commission, life insurance, housing insurance, and possibly even delivering your deeds. There may also be a limit on the amount you can borrow, which is based on the appraisal of the home.
Advantage of using your credit card
Comfort is the main advantage here, as well as any benefits you can get from credit card points that you can charge later. You can also search for credit cards that have affordable rates or grace periods.
Disadvantages of credit cards
While credit cards are a convenient way to pay for things, they are not a great way to finance a large purchase if you can not pay your balance within 30 days. Many have much higher interest rates than other types of loan products, and it is easy to get caught up in a cycle of making the minimum payment each month. Finally, very few credit cards offer a fixed interest rate, which means that they can change rates when they decide.
Personal loan through an online market
Advantages of an online market
Market loans, also called person-to-person loans, are an increasingly popular option for obtaining loans of up to $ 150,000.
Platforms like The Borrowers are increasingly popular due to fixed terms and fees that are often lower than credit cards. You can easily pay off your loan with monthly payments, and there are no early payment penalties, so you can repay the loan in full at any time.
It also requires less time than other options, with the approval process taking only a few minutes and the opportunity to obtain your loan in just a few days.
Disadvantage of online markets
Like any loan, you should compare the interest rates before applying for a loan to make sure you are getting the best rate for which you can qualify. Loans through online markets are also not a good option for people with bad credit histories.
Platforms like The Borrowers require a credit score of 640 or more to qualify.
Acquire a personal loan through a bank
Advantage of using a personal loan through a bank
Banks usually offer a fixed interest rate; This means that, like the loans of the market, it has a rate until the end of the term of the loan. Also, if it is through your bank, you can set up the direct payment so you never have to worry about paying the bill on time. Banks can also offer a longer term to repay the total amount of the loan.
Disadvantage of a personal loan through a bank
Personal loans tend to offer higher interest rates than other loans. In addition, some banks have a small letter about the time of recovery of the investment, this means that sometimes it will be penalized if it returns the loan before its expiration. You should carefully check the specifications of each bank to avoid unforeseen penalties.